A rush for the door seems driven by fear that Greece, perhaps Spain, are destined for exiting the euro. Worse yet, the U.S. economic indicators are weakening more than expected. Global recession starting to get ugly.

A drop in the May Philly Fed (regional business) survey Index to 5.8 from 8.5 and a 0.1% drop in the leading indicators contributed to fears that the U.S. economy may also be on the ropes.

Yesterday I said the Market would find support at DJIA 12,275 (S&P 500: 1292), rebound to DJIA: 12,610 (S&P 500:1333), then enter a second leg down to DJIA 11,915 (S&P 500: 1255). We could hit those support targets today or Monday.

There is a chance the rally would be smaller and second leg greater, depending on the news that hits it when it is declining.

I suspect, most traders will not want to be “long” over the weekend, though they may do some buying if the market gets hammered today.

We are faced with an ugly situation. Even if the Greek crisis is taken off the table temporarily, there is still in the uncertainty of the U.S. economy and of course the divisive politics of an election year.

Retail Sales (8:30) – Up 0.1% in April vs. a gain of 0.7% in March after a gain of only 0.1% in January.

Empire State Manufacturing Index (8:30)The Index jumped to 17.1 from 6.56 in March.

Business Inventories (10:00) – Up 0.6% in February against a 0.8% increase in sales resulting in an inventory/sales ratio of 1.28

Housing Market Index (10:00) - Down 3 points in April after 7 straight gains. The Index is comprised of a survey covering present sales of new houses, sale of new houses expected over next 6 months, and traffic of prospective buyers in new houses.

WEDNESDAY

Housing Starts (8:30) – dropped 5.8% in March after a drop of 2.8% in February, both multifamily and single-family houses were down.

Industrial Production (9:15) - Unchanged in March from February. Capacity Utilization down a smidge to 78.6%.

THURSDAY

Jobless Claims (8:30) - Claims were unchanged at 370,000 for the week ended May 12 The 4-week moving average was down 4,750 to 375,000.

Philly Fed Survey (10:00) – The Index was 5.8 in May, down from 8.5 in April, the first decline in 8 months.

Leading Indicators (10:00) – declined 0.1% in April. The decline was due to a drop in apartment building permits and a spike in unemployment claims.

George Brooks

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